DEFINITION of 'Refundable Credit'
A tax credit that is not limited by the amount of an individual's tax liability. Typically a tax credit only reduces an individual's tax liability to zero. Refundable credits go beyond this and so really can be considered the same as a payment.
BREAKING DOWN 'Refundable Credit'
In other words, you'll still get the credit even if you don't owe any tax. The earned income credit is a good example of a refundable credit in the United States.